Bayer hits decade low on Baycol insurance worries

Reuters, 02.25.03, 7:08 AM ET
 
FRANKFURT, Feb 25 (Reuters) - Concern whether its insurance would
cover all possible costs from U.S.  lawsuits hammered  shares  in
Bayer AG <BAYG.DE> on Tuesday, forcing them to their lowest level
for more than a decade.  

Bayer  stock  has  wiped  almost 20 percent from its value in two
sessions on jitters about potential liabilities  after  newspaper
reports  suggested  that executives may have known about problems
with the company's Baycol cholesterol drug  long  before  it  was
withdrawn in August 2001.  

Shares  in  the  chemicals and drugs giant plunged 9.4 percent to
12.95 euros by 1145 GMT,  wiping more than 980 million euros from
its market value.  Earlier it skidded to 12.88 euros,  its lowest
level for more than 10 years.  

"The prosecution in the case  seems  to  be  making  some  pretty
damning  claims  about  Bayer covering up the adverse side effect
profile of Baycol,"  said Colin Isaac,  chemicals analyst  at  JP
Morgan in London, who rates the stock "underweight".  

"If that is true -- and I don't know whether it is or is not -- I
would  assume  that  the  insurance cover would be null and void.
That could make a really big difference in  terms  of  the  total
pay-out." 

Bayer  previously  said cases settled so far have been covered by
insurance.  

But the New York Times  cited  at  the  weekend  newly  disclosed
company  documents  which  indicated  Bayer  executives  knew  of
problems with Baycol, also known as Lipobay,  an anti-cholesterol
drug, long before it was pulled from the market.  

Bayer  declined  to  comment  but said it planned to hold a press
briefing later on Tuesday.  

A lawyer for the firm has told Reuters the U.S.   Food  and  Drug
Administration  (FDA)  had  been kept informed at every turn.  Of
7,800 suits that have been filed against Bayer, approximately 450
have been settled out of court, the law firm said.  

By midday its shares had already traded in more than  one  and  a
half times its average daily total volume and they underperformed
the German blue-chip DAX index <.GDAXI> which lost 3.5 percent.  

(Additional reporting by Ben Hirschler in London)